even though 10 million will be hurt, it's hard for me to decide why that isn't interstate commerce, even more so where we know it affects everybody. >> well, justice breyer, there are other markets that affect everyone. transportation, food, burial services that we don't like to talk about that either. there also are situations where there are many economic effects from somebody's failure to purchase a product. if i can talk about the difference between the health insurance market and the health care market, ultimately i do want to leave here with the impression that anything turns on that. because if the government decided they've come up with a great -- private companies come up with a great wonder drug that would be great for everybody to take that would have huge health benefits for everybody and, by the way, also if everybody had to buy it, it would facilitate economies of scale, production great, price cheaper and force everybody in the health care market, the actual health care market to buy the wonder drug, i'd be up here making the same argument. saying that's not a power that's within the commerce power of the

federal government. it is something much greater and would have been much more controversial. that's an important thing. federalist 45, madison says the commerce power a new power, not one anyone has apprehension about. the reason they didn't have any apprehension about it is because it's a power only operated once people were already in commerce. you see that from the text of the clause. commerce with foreign nations. did anyone think the fledgling republic had the power to compel some other nation into commerce with this this? in the same way, if the framers had understood the commerce power to include the power to compel people to engage -- >> well, once again, though. who's in commerce and when are they in commerce? if the effect of all these uninsured people is to raise everybody's premiums, not just when they get sick if they get sick, but right now, in the aggregate, and wickard and raisch tell us we should look at

the aggregate and the aggregate of all these uninsured people are increasing the normal family premium, congress says, by $1,000 a year. those people are in commerce. they're making decisions that are affecting the price that everybody pays for this service. >> ms. kagan, with all due respect, i don't think that's a limiting principle. my unwillingness to buy an electric car is forcing up the price of an lech drik car. if more demanded an electric car -- >> this is very different, mr. clement and it's different because of the nature of the let care service that you are entitled to health care when you go an emergency room, when you go to a doctor, even if you can't pay for it. so the difference between your hypotheticals and the real case is the problem of uncompensated care.

>> well, justice kagan, if i don't buy a car and somebody goes on welfare, i'm going to pay for that, also. there's a real disconnect between the focus on what makes this different and the statute that congress passed. if all we were concerned about is the cost sharing that took place because of uncompensated care in emergency rooms, presumably we'd have before us a statute that only addressed emergency care in catastrophic insurance coverage, but it covers everything. soup to nuts and all sorts of other thing. that gets at the idea that there's two kinds of cost shifting going on here's one is the concern about emergency care and that somehow somebody who gets sick is going to shift costs back to other policyholders, but there's a much bigger cost shift going on here. that's the cost shifting that goes on when you force healthy people into an insurance market precisely because they're healthy, precisely because they're not likely to go to the emergency room and not likely to use the insurance they're forced to buy in the health care insurance.

that creates a huge windfall, lowers the price of premiums and again, this isn't some lawyer telling you that's what it does and trying to second guess the congressional economic decisions. this is congress' findings. findings i on page 43a -- >> all that sounds like you're debating the merits of the bill, you ask, really, for limiting principles. so we don't get into a matter i think has nothing to do with this case. broccoli. okay? and the limiting principles you've heard three. first, the solicitor general came up with a couple, joined, very narrow ones. you've seen in lopez this court is a that we cannot, congress cannot get into purely local affairs, particularly where they're non-commercial and, of course, the greatest limiting principle of all, which not too many accept, i'm not going to emphasize that, is the limiting principle derived from the fact members of congress are elected from states and that 95% of the

state law. that is a principle, though enforced by the legislature. the other two are principles, one written into lopez and one you just heard. it seems to me all of those eliminate the broccoli possibility, and none of them eliminates the possibility that we're trying to take the 40 million people who do have medical costs, do affect interstate commerce and provide a system that you may like or not like. >> justice breyer -- let me take them in turn. i would encourage this court not to garcia-ize the commerce clause and simply say it's up to commerce to police the commerce clause. i don't think that's a limiting principle. >> that's exactly what justice marshall said in gibbons. he says that it is the power to regulate, the power like all others rested in congress is complete in itself, maybe exercised to its utmost extent and acknowledges no limitations. other than those prescribed in

the constitution, but there is no constriction in the -- set forth in the constitution with respect to regulating commerce. >> i agree 100% and i think that was the chief justices point, which was once you open the door to compelling people into commerce based on the narrow rationales that exist in this industry, you are not going to be able to stop that process. >> see, that's -- >> i would like to hear you address justice breyer's other -- other two -- >> the other two principles are lopez and this case really is not -- i mean, lopez is a limit on the affirmative exercise of people already in commerce. the question is, is there any other limit to people who aren't in commerce? and so i think this is the case that really asks that question. and then the first point, which was, the solicitor general's point, with all due respect, simply a description of the insurance market. it's not a limiting principle, because the justification for why this is a valid regulation of commerce is in no way limited

to this market. it simply says these are economic decisions, they have affect on other people. my failure to purchase in this market has a direct affect of others in the market. that's firtly true -- >> >> and now return to justice sotomayor's question. >> i'd be delighted to. once you're in the commerce power the court not going to police that except maybe to the lopez point. that's why it's so important for the court to take an unprecedented step saying it not only includes the power to regulate, describes the rule by which commerce is governed. to go further and say not just prescribing the rule for commerce that exists but the power to compel people to enter into commerce in the first place. two very brief things about the taxing power. lots of reason why this isn't a tax. wasn't denominated a tax, wasn't structured as a tax. if it is a tax at all, it is a

direct tax, article i, section 9, clause 4, the framers would have had no doubt that a tax on not having something is not an excise tax but a forbidden direct tax. one more reason why this is not proper legislation because it -- it violates that. the second thing is i would urge you to read the license tax case which the solicitor general says is his best case for why you ignore the fact that a tax is denominated into something other, because that's a case where the argument was that because the federal government had passed a license, not a tax, that somehow that allowed people to take actions that would have been unlawful under state law, that this was some special federal license to do something forbidden by state law. this court looked beyond the label in order to preserve federalism there. what the solicitor general and the government asks you to do here is exactly the opposite which is to look past labels in

order to upend our basic federalist system. >> would you tell me, do you think the states could pass this mandate? >> i represent 26 states. i do think the states could pass this mandate, but -- >> is there any other area of commerce, business, where we have held that there isn't concurrent power between the state and the federal government to protect the welfare of commerce? >> well, justice sotomayor, i have to resist your premise because i didn't answer yes, the states can do it because it would be a valid regulation of intrastate commerce. i said yes the states can do it because they have a police power, and that is the fundamental difference between the states on the one hand and the limited enumerated federal government on the other. >> thank you, mr. clement. mr. carvin. >> thank you, mr. chief justice. may it please the court. i'd like to begin with the solicitor general's main premise which is that they can compel the purchases of health insurance in order to promote commerce in the health market

because it will reduce uncompensated care. if you accept that argument, you have to fundamentally alter the text of the constitution and give congress plenary power. it simply doesn't matter whether or not this regulation will promote health care commerce by reducing uncompensated care. all that matters is whether the activity actually being regulated by the act negatively affects commerce or negatively affects commerce regulation so that it's within the commerce power. if you agree with us that this is -- that this exceeds commerce power the law doesn't somehow become redeemed because it has beneficial policy effects in the health care market. in other words, congress does not have the power to promote commerce. congress has the power to regulate commerce, and if the power exceeds permissible regulatory authority then the law is invalid. >> surely the -- >> sorry. >> surely regulation includes the power to promote. ever since the new deal we've

said regulation -- there's a market in agricultural products. congress has the power to subsidize, to limit production, all sorts of things. >> absolutely, chief justice, and that's the distinction i'm trying to craw. when they are acting within their enumerated power, then obviously they are promoting congress, but the solicitor general wants to turn it into a different power. he wants to say we have the power to promote commerce, to regulate anything to promote commerce, and if they have the power to promote commerce, then they have the power to regulate everything, right? >> i don't think you're addressing their main point which is that they are not creating commerce in health care. it's already there, and we're all going to need some kind of health care, most of us will, at some point. >> i'd like to address that in two ways, if i could, mr. chief justice. in the first place, they keep playing mix and match with the statistics. they say 95% of us are in the health care market, okay? but that's not the relevant statistic, even as the government frames the issue. no one in congress or the

solicitor general is arguing that going to the doctor and fully paying him creates a problem. the problem is uncompensated care, and they say the uncompensated care arises if you have some kind of catastrophe. hit by a bus, have some prolonged illness. well, what is the percentage of the uninsured that have those sorts of catastrophes? we know it's got to be a relatively small fraction, so, in other words -- >> but we don't know who they are. >> we don't, and we don't know in advance, and -- but that doesn't change the basic principle that you are nonetheless forcing people for paternalistic reasons to go into the insurance market to insure against risks that they have made the voluntary decision that they have decided not to. >> but the problem is -- the problem is that they are making rest of us pay for it, because as much as they say, well, we're not in the market, we don't know the time when they will be and the -- and the figures that how

much more families are paying for insurance because people get sick, they may have intended to self-insure, they haven't been able to meet the bills fore res up paying because the people are getting cost-free health care, and the only way to prevent that is to have them pay sooner rather than later, pay up front. >> but my point is this. with respect, justice ginsburg, conflicts the people who do result in uncompensated care, the free riders. those are the people who default on the health care payments. that's an entirely different group of people, an entirely different activity than being uninsured. so the question is whether or not you can regulate activity because it has a statistical connection to an activity that harms congres. and my basic point to you is

this. the constitution only gives congress the power to regulate things that negatively affect commerce or regulate things that are statistically connected to things that negatively affect commerce. i'm sorry. >> please. >> i was just going to say because if they have that power, they obviously have the power to regulate everything because everything in the aggregate is statistically connected to something that negatively affects congress and every compelled purchase promotes congress. >> so in your view right there -- in your view right there -- >> i'm sorry. >> i'm picking on something, if it turned out there was some terrible epidemic sweeping the united states and we couldn't say that more than 40% or 50%, i can make the numbers as high as i want, but the -- you'd say the federal government doesn't have the power to get people inoculated to require them to be inoculated because that's just statistical. >> i think in all candor morris must have decided that issue, right, because people -- >> is your answer to that yes or no? >> my answer is, no, they couldn't do it --

>> they could not do it. they cannot require people even if this disease is sweeping the country to be inoculated. the federal government has no power, okay, fine. please turn to justice kagan. >> may i please explain why. >> violence against women is -- obviously creates the same negative impression on fellow citizens as this communicable disease, and it has huge effects on the health care of our country. congress found that it increased health care costs by -- >> i agree with you that it had big effects, but the majority thought that was a local matter. >> i think that's his point. >> i don't know why having a disease is any more local than beating up a woman, but -- but my basic point is that notwithstanding its very profound effect on the health care market. this court said the activity being regulated, ie violence against women, is outside the commerce clause power so regardless of whether it has beneficial downstream effects, we must say no. congress doesn't have that

power. why not? because everything has downstream effects on commerce, and every compelled purchase promotes commerce. by definition it helps the sellers and existing -- >> mr. carvin, isn't there this difference between justice breyer's hypothetical and the law that we have before us here? in his hypothetical the harm to the other people from the communicable disease is the result of the disease. it is not the result of something that the government has done, whereas here, the reason why there's cost shifting, is because the government has mandated that. it has required hospitals to provide emergency treatment, and instead of paying for that through a tax which would be borne by everybody is has required -- it has set up a system in which the cost is surreptitiously shifted to people who have health insurance and who pay their bills when they go to the hospital. >> justice alito, that's exactly the government's argument, and it's an extraordinarily illogical argument. >> if that's so, let me just

change my example under pressure and say that in fact it turns out that 90% of all automobiles driving interstate without certain equipment put up pollution which travels interstate. not 100%, maybe only 60%. does the epa have the power then to say you've got to have an anti-pollution device? it's statistical. >> what they can't do -- yes, if you have a car, they can require you -- >> then you're not going on statistics, you're going on something else which is what i'd like to know what it is. >> it's this. they can't require you to buy a car with an anti-pollution device. once you've entered the market and made a decision, they can regulate the terms and conditions of the car that you do have and they can do it for all sorts of reasons. what they can't do is compel you to enter the market. >> and then you've changed the ground of argument which i accept as totally legitimate, and then the question is when

you are born and you don't have insurance and you will in fact get sick and you will in fact impose costs, have you perhaps involuntarily, perhaps simply because you are a human being, entered this particular market which is a market for health care? >> if being born is entering the market, then i can't think of a more plenary power congress can have because that literally means they can regulate human activity from cradle to grave. i thought that's what distinguished the plenary police power from the very limited commerce power. i don't disagree that giving the congress plenary power to mandate property transfers from "a" to "b" would be a very efficient way of helping "b" and of accomplishing congress' objective. >> i see the point, going back to justice kagan, don't forget her question. >> i've forgotten my question.

>> i was facing the same dilemma, justice kagan. >> let me ask a question that i asked mr. clement. it just seems -- >> it's what it means to be a junior justice. >> it just seems very strange to me that there's no question we can have a social security system besides all the people today, i'm being forced to pay for something i don't want, and this would seem to me to try to get care for the ones who need it by having everyone in the pool, but it's also trying to preserve a rule for the private sector, for the private insurers. there's something very odd about that, that the government can take over the whole thing and we all say, oh, yeah, that's fine. but if the government wants to preserve private insurers, can't do that. >> well, i don't think the test of a law's constitutionality is whether it more adheres to the

libertarian principles of the kato institute or the status principles of someone else. inss principles of someone else. i think the test of the law constitutionally is not the policy questions. it's whether or not the law is regulating things that negatively affect commerce or don't. since it doesn't in any way interfere with regulation of the insurance companies, i don't think it can pass the -- >> i thought that it was you must buy. we're not going to let you use the home grown wheat. you have to go out and buy that wheat that you don't want. >> what they were regulating was the supply of wheat. it didn't require every american to go out and buy wheat. y yes, it will affect the supply

and the demand of the product. that's why you can regulate them. because those local market participants have the same effect on the interstate market that a black market has on a legal market. but none of that is true. in other words, you can regulate local bootleggers, but that doesn't suggest you can regulate tea totalers, someone who stays out of the liquor market because they don't have any negative effect on the market participants or regulation. >> that's why i suggested it might be different if you were raising an as-applied challenge and presenting a class of people whom you could say whom you could say clearly would not be in the health care market. we c't many people this law addresses will, in fact, not participant in the health care market and will, in fact, not impose costs on all of the rest of us.

so do we have a crystal ball and say most of these people will be and most of these people will thereby impose costs on the rest of us and that's a problem that we can deal with on a class wide basis. >> again, the people who impose the cost on the rest of us are people who engage in a different activity at a different time, which is defaulting on their health care payments. it's not the uninsured. under your theory, you could regulate anybody if they've got a statistical connection to a problem. >> the government's position is

everybody is going to enter the health care market. >> the health insurance market is different than the health care market. but let's take it on full spriesprie stride. everybody is in the milk market or the wheat market, but that doesn't suggest the government can compel you to buy five gallons of wheat or five bush els of wheat because they're not regulating commerce. whether you're a market participant or not, they're still requiring you to make a purchase that you don't want to do. to get back to your example -- >> that's true of almost every product. directly or indirectly by government regulation, the government says borrowing my colleague's example, you can't buy a car without emission control. i don't want emission control. but i'm forced to do something i don't want to do by government regulation.

>> you're not forced to buy a market you don't want. i agree with you. there's no limited principle on their compelled purchase. when they put the -- >> they force me if i need to buy pasturized goods, there is government compulsion in almost every commission decision because the government regulates so much. it's a condition of life some may rail against. >> let's think of it this way, yes, when you enter the mark they cannic pose restrictions on you. and they can, for example, imfoez restixs on states. they can wipe out the laws, they can condition them. but what can't they do? they can't compel the states to enact laws. they can't compel states to carry out federal law.

and i am arguing for precisely the same distinction, because everyone intuitively understands that regulating participants after "a" and "b" have entered into a contract is fundamentally less intrusive than requiring -- >> we let the government regulate the manufacturing process whether or not the goods will enter into interstate commerce merely because they might statistically. there's all sorts of government regulation of manufacturing plants, of agricultural farms, of all sorts of activity that will be purely intrastate because it might affect interstate activity. >> i fully agree with you, justice sotomayor. >> so how is that different from saying you are self-insuring today, you're foregoing insurance? why isn't that a predecessor to the need that you're eventually going to have? >> the case as you referred to i think effectively eliminated the distinction between participants

in the intrastate market vis-a-vis participants in the interstate market. none of those cases suggest that you can regulate people that are outside the market on both an intrastate or interstate level by compelling them to enter into the market. >> what about, you know, the simplest counterexample for me to suggest is you've undoubtedly read judge sutton's concurring opinion, or he has about two pages, it seemed to me, of examples where everyone accepts the fact that under these kinds of regulations the government can compel people to buy things they don't otherwise want to buy. for example, he gives even in that farm case, the farmer was being forced to go out and buy grain to feed to his animals because he couldn't raise it at

home. you know, he goes through one example after another, so what -- what is your response to that which you've read? >> judge sutton is wrong in each and every example. there was no compulsion for him to buy wheat. he could have gotten wheat substitutes or he could not sold wheat which is actually what he was doing. there's a huge difference between conditioning regulation, ie conditioning access to the health care market and the saying you must buy a product and forcing you to buy a product. i thought -- >> it was common ground that the requirement -- that the insurers, what was the community-based one, that they have to insure you despite your health status. they can't refuse because of pre-existing conditions. the government tells us, and congress determines, that those two won't work unless you have a pool that will include the people who are now healthy,

so -- well, first, do you agree with your colleague that the community-based, and what's the name that they give the other? >> the guaranteed issue. >> that that is legitimate commerce clause legislation? >> oh, sure, and that's why -- but we didn't -- we don't in any way impede that sort of regulation. these non-discrimination regulations will apply to every insurance company, just as congress intended, whether or not we buy insurance.

>> wouldn't that be the determination that they can't possibly work if people don't have to buy insurance until they are -- until their health status is such that the insurance company just dealt with them on it will and say i won't insure you because you are already sick? >> it depends what you mean by work. it will work just fine in ensuring no people are discriminated against, but when you do that -- >> the sick people, why would they insure early if they are going to be protected if they get insurance late? >> yeah. this is the government's very illogical argument. they seem to be saying we couldn't force people to buy insurance to lower health care premiums but we can do it because we've created the problem. we, congress, have driven up the health insurance premiums and since we've create that had problem it somehow gives us authority we otherwise wouldn't have. >> so you think that there's -- what percentage of the american people who took their son or daughter to an emergency room and that child was turned away because the parent didn't have insurance, do th